In 1968, McCloskey became an assistant professor of economics at the University of Chicago, where she stayed for 12 years, gaining tenure as an associate professor in economics in 1975, and an associate professorship in history in 1979. Her work at Chicago is marked by her contribution to the cliometric revolution in economic history, and teaching generations of leading economists Chicago Price Theory, a course which culminated in her book The Applied Theory of Price.[6] In 1979, at the suggestion of Wayne Booth in English at Chicago, she turned to the study of rhetoric in economics. Later at the University of Iowa, McCloskey, the John Murray Professor of Economics and of History (1980–99), published The Rhetoric of Economics (1985) and co-founded with John S. Nelson, Allan Megill, and others an institution and graduate program, the Project on Rhetoric of Inquiry.[7] McCloskey has authored 16 books and nearly 400 articles in her many fields.[8]

Her major contributions have been to the economic history of Britain (19th-century trade, modern history, and medieval agriculture), the quantification of historical inquiry (Cliometrics), the rhetoric of economics, the rhetoric of the human sciences, economic methodology, virtue ethics, feminist economics, heterodox economics, the role of mathematics in economic analysis, and the use (and misuse) of significance testing in economics, and, in her trilogy "The Bourgeois Era,"[9] the origins of the Industrial Revolution.

Her book The Bourgeois Virtues: Ethics for an Age of Commerce[10] was the first of a planned series of books about the world since the Industrial Revolution—the Bourgeois Era—and was published in 2006. McCloskey argued that the bourgeoisie, contrary to its self-advertised faith in prudence only, believes in all seven virtues.

The second, Bourgeois Dignity: Why Economics Can't Explain the Modern World was published in 2010, and argued that the unprecedented increase in human welfare of the 19th and 20th centuries, from three dollars per capita per day to over 100 dollars per day, issued not from capitalist accumulation but from innovation.

The third, Bourgeois Equality: How Ideas, Not Capital or Institutions, Enriched the World appeared in 2016.[9] McCloskey expanded her argument, coining the term "Great Enrichment" to describe the unprecedented gains in human welfare of the 19th and 20th centuries. She reiterated her argument that the enrichment came from innovation and not from accumulation as argued by many from Karl Marx to Thomas Piketty.

McCloskey was born as Donald McCloskey, and this was the name she was known by for the first three decades for her research career. Married for thirty years, and the parent of two children, she made the decision to transition from male to female in 1995, at the age of 53, writing about her experience in a New York Times Notable Book of the Year, Crossing: A Memoir (1999, University of Chicago Press).[11] It is an account of her growing recognition of her female identity, and her transition—both surgical and social—into a woman (including her reluctant divorce from her wife). The book describes her new life, following sex-reassignment surgery, continuing her career as a female academic economist.

McCloskey has described herself as a "literary, quantitative, postmodern, free-market, progressive Episcopalian, Midwestern woman from Boston who was once a man. Not 'conservative'! I'm a Christian libertarian."[14]